Shares of HSBC vaulted over 15 percent in Hong Kong in their biggest daily advance in five months on Thursday, joining a global bank rally spurred by encouraging U.S. data and an expected easing of accounting rules.
By 0745 GMT, shares in HSBC had rallied 15.4 percent to HK$49.50, after touching HK$49.60 earlier -- their highest level since it announced its cash call a month ago, as the technical overhang related to its massive $18 billion rights issue subsided. Wednesday was the last day of trading of the bank's nil-paid rights in London.
The big move in HSBC alone accounted for 2.5 percent of the 6.8 percent rally on the benchmark Hang Seng Index . It was also the most traded stock on the exchange on Thursday, with shares worth HK$3.8 billion ($487 million) changing hands by late afternoon.
The stock fell 19 percent in March, far underperforming a 6 percent rally on the main index.
Wall Street banks including JPMorgan Chase and Goldman Sachs climbed overnight with the U.S. accounting watchdog expected to approve changes to controversial mark-to-market regulations on Thursday. Meanwhile, pending home sales in February rose more than expected.
HSBC still has mortgage-backed securities and asset-backed securities in the United States, so a change in the mark-to-market regulations should help them to some extent, said Steven Chan, banking analyst with Daiwa Securities in Hong Kong.
But its not just about HSBC's P&L. A change like this will help the entire U.S. financial system and that could trigger a chain reaction with banks starting to lend more and helping the economy pull its way out of the credit crunch, said Chan.
Australian brokerage Macquarie raised its rating on HSBC stock to neutral from underperform saying the stock was likely to re-rate following the completion of the bank's equity raising exercise.
In the longer term, we consider that HSBC deserves to trade at a premium to most European banking peers due to its faster-growth emerging markets exposure, ss.com))